Deputy Prime Minister VuongDinh Hue received Mr. John Nelmes - Head of the IMF Article IV Mission Delegation at a solemn meeting in Hanoi on April 22.
At the meeting, Mr.JohnNelmes said, last year, growth was strong, inflation fell to low levels, foreign direct investment was robust, and important new trade agreements were successfully negotiated.
The achievement of macroeconomic stability provides a solid foundation for a broadly positive economic outlook of Vietnam, although risks and medium-term challenges exist. For 2016, growth is expected to ease to around 6 percent, mainly reflecting weaker external demand and severe drought and salination of arable land that have adversely affected agriculture. Underlying inflation should remain low, although headline inflation is expected to rise modestly due to a pick-up in food prices and planned increases in administered prices for education and health services. The current account surplus is projected to ease in the near term with slowing external demand although foreign direct investment is expected to remain strong, Mr.John Nelmesadded.
Mr.JohnNelmes also highlighted the negative impacts of climate change in recent times as difficulties that Vietnam is facing and that they could affect the national economy.
For his part, Deputy Prime Minister Vuong Dinh Hue thanked the policy advice that delegation suggested to Vietnam in recent years as well as the assessmentthat the IMF noted the positive results of socio-economic development, macroeconomic stability of Vietnam.
Deputy Prime Minister Vuong Dinh Hue said the Vietnamese Government will double its efforts to improve the business environment, increase the economy’s competitiveness, and address current shortcomings.
Vietnam will continue its management to ensure macroeconomic stability and curb inflation to below 5 percent in 2016 and the following years, while closely monitoring the market to adjust the monetary policies for stable exchange and interest rates, reasonable credit growth, and increasing foreign currency reserves.
The State budget overspending is expected to stand at 5 percent in 2016 and be lower over the next five years. Meanwhile, the public debt will be kept at a safe limit, and bad debts will be handled effectively, he said.
The Vietnamese Party and Government persistently pursue the target of macroeconomic stability while focusing on growth quality and economic restructuring, especially reinforcing finance, handling bad debts, and restructuring the banking system, he said, adding that Vietnam hopes to receive more support from the IMF.
The Deputy Prime Minister hailed the outcomes of the working session between the State Bank of Vietnam and the IMF delegation. The Deputy Prime Minister suggested the team of the IMF continue proposing practical policy recommendations for Vietnam in the future and advocating the nation’s development orientations and policies
The delegation of the IMF made a preliminary evaluation on the country’s macro-economic situation, especially fiscal, monetary issues, and performance of banks and State businesses after working sessions with Vietnamese ministries, agencies, commercial banks and private sector.
Before the meeting with Deputy Prime Minister Vuong Dinh Hue, the IMF’s experts had a meeting with Mr. Nguyen Van Binh, head of the Party Central Committee’s Commission for Economic Affairs, in Hanoi on April 21.
At the reception, Mr. Nguyen Van Binh spoke highly of the practical and efficient cooperation between Vietnam and the IMF, especially in policy consultation for banking and finance. In addition, Mr. Nguyen Van Binh briefed about Vietnam’s socio-economic development directions and tasks for 2016-2020 adopted at the 12 th National Party Congress to the IMF’s delegation.
He also clarified the country’s challenges while highlighting its priorities on completing institutions, stabilising the macro economy, controlling the inflation rate, renovating the fiscal policy to reduce overspending and tackle public debt, developing financial markets as well as restructuring financial institutions and state-owned enterprises.
Meanwhile, Mr. JohnNelmes hailed Vietnamese economic improvements, particularly in monetary policy management, exchange rate monitoring and the shake-up of the banking system in the past year.
He added that the moves help ensure macroeconomic stability, maintain a rational growth rate and assure essential social requirements.
The IMF experts agreed with the key missions in Vietnam’s reform process, especially in renovating the fiscal policy, and revamping the banking system and enterprise restructuring.
